Serious Money: Buffett Looking Beyond Our Borders -- Part 3

There are many places that Warren Buffett may choose to invest Berkshire Hathaway (BRK.A / BRK.B) capital. At the same time you can be sure there are places he will not set foot. It is not likely he will invest anywhere that does not have a vibrant, well-established stock market with a stable government. So, Mr. Hugo Chavez in Venezuela will not likely see any capital deployed from the likes of "my pal Warren" any time soon.

As a matter of fact, I would put the chances at slim of any South American country, besides Brazil, getting a look at all. Brazil is just too big and too vibrant to ignore. I would rule out Africa entirely except for indirect investments in oil and minerals through large conglomerates. The closest thing in the region would be Israel, at the furthest western reaches of Asia. He has already invested there and there is a high probability he would again. Investors from most of Europe and Asia have done the same, although many would rather not discuss it.

He has also invested in China, Great Britain, South Korea, and Switzerland. I would expect more money to be plowed into all of them again without reservation if the right deal materialized.

Australia may present many opportunities because of its proximity to Asia. Most of the larger Asian economies would allow for investment. Despite all the turmoil in Europe right now, I think this increases the probability that it is ripe for investment in Buffett's eyes. Eastern Europe is another question and that I would say would be a borderline call, since there are so many other considerations and the governments and stock markets are not well established.

To most Americans, investing in Canada would not seem like expanding one's investment horizons very far. However, I see this as another high probability. In particular in the areas of insurance and finance, expanding upon areas that Berkshire already has major holdings. Mexico has many strong companies that periodically can be had at bargain prices, but I am on the fence with this one because Buffett could have invested there years ago if he was so inclined.

Buffett has the acumen to trade currencies and place large bets in the bond market, in addition to his proclivity for the stock market. This however is beyond my own realm so I will not speak to this issue. It is also very conceivable that Buffet will choose to play the role of lender again, as he did with General Electric (GE) and Goldman Sachs Group (GS). I imagine he would also seek very similar terms and not do it unless the company was one that he did not mind taking ownership of.

Another limiting factor Buffett will most definitely consider is time and track record. I would be very surprised if he decided to invest in any company that was not more than ten years old, and even more likely 20, with well-seasoned management. Predictability, dependability and reliability can not be emphasized enough when it comes to Buffett placing a bet. He will be very patient and deliberate in his search for the next investment.

If you want to review this series from the beginning the following are the first two posts.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: He own shares of BRK.B, GE, and GS.

Serious Money: Buffett Looking Beyond Our Borders -- Part 3

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